US, China Reach 'Framework' to Activate Geneva Trade Deal

The U.S. and China have agreed on a "framework" to implement a trade deal struck last month, pending approval from both countries' leaders, Commerce Secretary Howard Lutnick said on Tuesday.

Progress on trade peace with China, particularly if it resolves the issue of crucial Chinese rare earth minerals exports, would be a boon to an economy and markets that have struggled for months with the impact of President Trump's tariff program.

After a series of tit-for-tat retaliations in April, the world's two largest economies effectively had a trade embargo in place, with 145% U.S. tariffs crushing imports from China.

The sides announced a trade deal that included a 90-day pause on most of those tariffs on May 12 after a weekend of high-level talks in Geneva.

Only days later, the U.S. issued global restrictions on the use of certain Chinese chips from Huawei Ascend, saying they were developed in violation of U.S. export controls.

The Chinese reacted furiously, and soon there were reports the government was restricting exports of the rare earth materials needed for hundreds of the world's most important high-tech products.

The U.S. subsequently retaliated with a move to restrict and withdraw visas for Chinese students.

Trump and Chinese leader Xi Jinping spoke for 90 minutes last Thursday about trade issues, and agreed to high-level talks immediately.

That led to this week's meeting in London.

"We have reached a framework to implement the Geneva consensus," Lutnick told reporters in London Tuesday night after marathon trade talks, Bloomberg reported.

The Wall Street Journal reported that Tuesday's deal would essentially get the May 12 deal back on track, including the lowered tariffs and the loosened Chinese restrictions on rare earths.

The trade war is squeezing both economies.

Bloomberg reported Monday that Chinese May exports missed expectations, with a 34% drop in shipments to the U.S. despite the trade truce — the biggest decline since the early days of the pandemic.

U.S. hard economic data has thus far been resilient, though there are growing signs of weakness in the labor market and rising prices.

The deal is now in the hands of the two leaders, with few specifics yet about what it entails or how it would be implemented.